url
10
Jun
2014

THE IMPORTANCE OF MONITORING AND ENTREPRENEURSHIP CONCEPT AS FUTURE DIRECTION OF MICROFINANCE: Entrepreneurial Development

The implementation of Ninth Malaysian Plan (9MP) objectively stressed that the rate of poverty has to be reduced to 2.8 percent by 2010. Among the strategies being adopted include the creation of more micro entrepreneurs among the poor to undertake businesses using small loans such as microcredits and micro-capital supports. However, based on other studies by Asyraf Wajdi and Sow, most of the micro entrepreneurs in Malaysia faced difficulties in getting access to financial support from the commercial banks or other financial institutions. The difficulties arise due to the inability of the micro entrepreneurs to provide collaterals or reliable guarantors, business plans and business records for supporting their loan approvals. Hence, during the 9MP period, more micro-entrepreneurial programs among the poor were established and operated by various Government agencies such as Ministry of Rural and Regional Development (MRRD), Ministry of Entrepreneurial and Cooperative Development (MECD) -undertaken by Yayasan TEKUN Nasional (TEKUN) and Majis Amanah Rakyat (MARA), Lembaga Zakat Selangor (LZS) through Asnaf Entrepreneurship Development Programme and other Non-Government-Linked Corporations (GLCs) including Yayasan Basmi Kemiskinan Selangor (YBK) and Amanah Ikhtiar Malaysia (AIM).
Table 1 shows that Government’s capital supports for entrepreneurial activities are more focused on the micro-capital compared to other forms of capital supports. However, not many studies have been conducted this far to assess the effectiveness of micro financing programs handled by AIM, TEKUN, LZS and YBK in enhancing the income level of the recipients and their contribution to the development of micro entrepreneurs in the country. Available empirical studies were mainly focused on the microcredit program under AIM which was pioneered in 1987.
Currently, microfinance programs in Malaysia have been conducted by various agencies. Thus, there might be possibilities that the program implementation approach might differ, in particular, rules and regulations pertaining to selection and screening of program-members, operational approach, competencies and monitoring and also differences in characteristics of the program. Alternatively, there might be some duplication in terms of inter-agencies operational tasks which amount to loss and misallocation of funds, labor, time and energy. Therefore, there are some pertinent questions normally being raised: Why should there be too many microfinance programs in Malaysia? Is there any inefficiency in the operations of the existing microfinance programs which led to the formation of new microfinance programs? Is every program efficient in terms of uplifting the income level of program-members and contribute towards the development process of micro-entrepreneurship? Therefore, this study aims at assessing the efficiency of microfinance programs in enhancing entrepreneurs income level and their contribution to the entrepreneurial development in Malaysia.

Table 1: Malaysian Government Allocations for Funding Support for SMEs, 2006-2007

No. Type of Funding 2006 2007
No. of Schemes Allocations (RM billion) No. of Schemes Allocations (RM billion)
1 Easy Loans* 59 11.83 64 13.25
2 Grants 20 2.27 22 4.52
3 Introductory Capital 7 1.57 9 1.63
4 Equity 2 0.08 2 0.39
5 Easy Loans and Equity 3 0.56 3 0.66
Total 91 16.31 100 20.44

The implementation of Ninth Malaysian Plan (9MP) objectively stressed that the rate of poverty has to be reduced to 2.8 percent by 2010. Among the strategies being adopted include the creation of more micro entrepreneurs among the poor to undertake businesses using small loans such as microcredits and micro-capital supports. However, based on other studies by Asyraf Wajdi and Sow, most of the micro entrepreneurs in Malaysia faced difficulties in getting access to financial support from the commercial banks or other financial institutions. The difficulties arise due to the inability of the micro entrepreneurs to provide collaterals or reliable guarantors, business plans and business records for supporting their loan approvals. Hence, during the 9MP period, more micro-entrepreneurial programs among the

About The Author

Kevin J. Brandon

Home | Site Map | Contacts

Copyright © 2013 - 2019 Investment And Finance Online. All rights reserved